There are many groups of people who loose out when it comes to pensions, these include self-employed, people working for small employers, but the largest group by a long way is WOMEN. Although making up a large proportion of the paid workforce and a much bigger part of those who care for others , women are a long way behind men in the saving for retirement stakes.

 

Since The Pensions Act 2007, it has been much easier for women to build up entitlement to the Basic State Pension. This has been done by reducing the qualifying number of years of National Insurance contributions from 39 to 30 years, as well as  giving more credits from unpaid carers. With the basic state pension being indexed in line with earnings rather than prices and moving S2P so that it is flat rate in the long term also helps women, whose pensions are made up by a higher proportion of state pension income, than that of men.

 

However, improvements in state pension benefits have not been matched by women increasing their own pension/retirement savings. Between 2006 and 2007, the gap between men and women privately saving for retirement increased from 8% to 13% (Source: Scottish Widows UK Pensions Index based on over 30s earning at least £10,000 per annum).

 

Basically, we all need to take control of our pension and retirement planning.

 

Young Women Action Plan

 

Start saving as early as you can – money saved when you are in your 20s has much longer to benefit from investment growth. You could also find that saving is interrupted in your 30s and 40s by looking after children.

 

Ensure you are claiming any benefits available at work – Ask your employer is there is a pension scheme, which they might even contribute to if you agree to start saving. All firms with 5 or more employees must have a stakeholder pension scheme in place. Personal pension contributions benefit from tax relief! A £100 contribution costs a basic rate taxpayer £80 and a £500 contribution costs a higher rate taxpayer £300!

 

Think long term – If you want to get maximum benefit, you need to think and act long term. It might seem selfish to lock away some of your money until retirement when you have children to worry about, but planning for your retirement is a basic financial need.

 

Pension contribution sharing during marriage­ – Where one of you has given up full time work to look after children, the main earner could easily contribute to a pension on your behalf.

 

Women over 50 Action Plan

 

Think about your state entitlement – Starting with how much state pension you are entitled to would be a good starting point. It may be possible to make up shortfalls of broken years of national insurance contributions. Contact the DWP (Department for Work and Pensions) or your financial advisor for further details.

 

Pensions Tracing – Currently, billions of pounds worth of pensions are unclaimed. This is mainly due to people moving jobs throughout their lives and not keeping in touch with pension providers or previous employers. You can trace lost pensions through www.thepensionservice.gov.uk

 

Pension-sharing on divorce – while this applies to women of all ages, it is more likely to be significant to those who are nearing retirement. These women have less time to build up their own pension pot before they reach retirement, so should not be so quick as to waive their rights to any pension savings which have been built up during their married life.

 

Inheritance – don’t count on it – Windfalls at or in retirement could easily be spent on other things, such as long term care and other unforeseen expenses.

 

At what age should I retire? It pays to delay – With over 1 million people of retirement age still in employment , deferring your pension could increase your benefits. By starting your pension at age 65 instead of age 60 could give you the potential of a large increase in income by way of extra growth, further pension contributions and a potentially higher annuity rate. This could prove to be an effect way of making up any shortfall you may have in retirement income.

 

Generating income in other ways – Did you know that over half of women over the age of 50 own their own home outright? The value of this asset could be used in different ways to increase your retirement income.